Barney Frank On Bailouts, Welfare

Barney Frank has been called the "smartest guy in Congress," which is lucky for us since he works on some of the thorniest issues around.

The 14-term, 68-year-old Harvard-educated Democratic congressman from Massachusetts is chairman of the House Financial Services Committee, which means his portfolio includes banks, housing and now the auto industry.

He has been at the center of both the $700-billion dollar rescue for financial institutions, and the bailout attempt for the car companies that failed in the Senate.

He worked on both this past week: pressuring Treasury Secretary Henry Paulson to deal with home foreclosures, and negotiating with the White House on the loan for GM and Chrysler. True to textbook liberalism, Barney Frank worked hard to keep the carmakers out of Chapter 11.

"But I wonder why? Because when these companies finally get into bankruptcy they can do the tough things that they can't otherwise do," correspondent Lesley Stahl asks.

"There's only one thing you can do in bankruptcy: break your word, break your deals. It allows you to say to the small businesses, who have been catering lunches for you, 'Sorry, we're not paying you.' It allows you to go to the workers and say, 'Sorry, we're not paying you,'" Rep. Frank says.

Frank is a no-nonsense chairman who brought the heads of the big three auto companies before his committee, and let anyone who wanted to vent. But there was never any doubt that Frank himself didn't want the car companies to go under.

"What about the idea that in capitalism, if a company doesn't cut it, they die?" Stahl asks.

"Yes, it's true," Frank acknowledges. "And Darwin was a very good biologist. I don't think he was much of an economist."

"What we're now faced is with all the taxpayers having to prop up companies that made terrible decisions consistently," Stahl remarks.

"No, we're not propping up companies," Frank insists. "That's your mistake. We're propping up individuals. The world doesn't consist of companies. The world are people. The country is people. And yes, it is possible to argue that the government..."

"But then you're talking about welfare," Stahl says.

"Yeah, I'm for welfare," Frank replies. "You're not? Are you for letting people starve?"

At a meeting on Tuesday, Frank listened to mayors of towns hit hard by car factory layoffs.

"You know, there's a theory out there that you, the congressman, had this public spanking of these [car-company CEOs] in order to cover yourselves," Stahl asks but then Frank interrupts:

"That's the kind of argument that people who do not have any idea what they're talking about like to make."